Comments on: Exporting Danish-style Recourse Mortgages

By: JimAtLaw

JimAtLaw — Thu, 25 Jun 2009 22:08:10 +0000

Yep, I’ve been waiting for a while now for banks to start pursuing the defaulting borrowers, esp. those that cashed out their equity and then stopped paying.

Seems like they’ve tried to avoid this so far to avoid getting cast any more as the “predatory lenders” than they already have been, but the call of the ca$h may eventually be too strong to ignore, and I for one have no sympathy for the people who cashed out their so-called equity for plasma TVs and Lexuses and are now failing to make the payments on those luxuries.

By: Coffee

Coffee — Wed, 24 Jun 2009 13:43:04 +0000

You are right, deficiency judgements are allowed in most states. Those that do not, would be on “Purchase loans” only. When you refinance you lose that protection. Most banks do not pursue the deficiency but could. Deficiency is not sought for the simple logic of spending money to squeeze the turnip. Spending money to seek money from the loser seems perverse in US society.

The Banks could always go after the deficiency in case of fraud. It would be nice to see them go after the multi millionaire Preacher from the previous post that gave up the 21 homes

By: dfenstrate

dfenstrate — Wed, 24 Jun 2009 11:46:21 +0000

Uh…. I think they can already pursue you for deficiencies post-foreclosure. I’m under the impression that the FHA & VA doesn’t, as a rule, pursue deficiencies, but other lenders do.

Now they’ll often take a big discount on the deficiency just to recover some money.

So I’m confused? How is this ‘danish’ system different from what we do now?

You borrow money. The sale of the collateral doesn’t cover it all. You still owe the rest of the money you borrowed.

Pretty straightforward.